No Problem with State-Owned Banks Lending From China: LPS

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  • Ekonom Standard Chartered Bank, Fauzi Ichsan. TEMPO/Dasril Roszandi

    Ekonom Standard Chartered Bank, Fauzi Ichsan. TEMPO/Dasril Roszandi

    TEMPO.CO, Jakarta - Fauzi Ichsan, acting director of the Depository Insurance Corporation (LPS), said that state-owned banks’ decision to take loans from China would not cause a problem since the move was considered as corporate’s decision.

    “We won’t comment on a business policy made by each [state-owned] bank,” Fauzi said in Jakarta on Wednesday, September 23, 2015.

    Earlier, state-owned banks—Bank Mandiri, Bank Rakyat Indonesia (BRI), Bank Negara Indonesia (BNI)—signed loan agreements in Beijing, China, on Wednesday, September 16, with the China Development Bank to take a US$3 billion worth of loan. Each bank obtained US$1 billion with a tenor of 10 years.

    The agreement signing was witnessed by State-Owned Enterprises Minister Rini Soemarno and Minister/Chairman of National Development and Reform Committee Xu Shaoshi.

    According to Fauzi, the loan agreements involving the three state-owned banks will not be a problem because they are in a healthy condition. Fauzi added that the nonperforming loans ratio of the banks was under control at 2.6 percent. In addition, Fauzi said that the banks’ capitalization rate and profit were strong enough to absorb and cover the NPL ratio.

    Overall, Fauzi explained, the LPS viewed that the loan agreements based on the health of the related banks. The indicators include the banks’ ability to absorb the NPL and Capital Adequacy Ratio.